A product supply chain generally includes a combination of manufacturers, secondary distributors, and customers, and is traditionally characterized by a manufacturer responding to demands (i.e., purchase orders) placed by their distributors, customers, or a combination thereof. However, a manufacturer responding purely to demand introduces inefficiencies into the distribution of products. Namely, fluctuations in demand result in purchase orders that either over or under estimate inventory requirements. This can result in both the shipment of unneeded products, and in failures to meet customer demand.
Efforts to alleviate these inefficiencies include optimizing purchase orders via an inventory control system. An inventory control system generally tracks average demand over time, and determines a size and frequency for purchase orders that maintains a constant average inventory that is robust to predicted fluctuations in demand.
Another issue in inventory control optimization is the issue of packing. Specifically, the capacity of delivery vehicles may not be perfectly matched to the quantity of units determined for a shipment via an inventory control system. In an example, an inventory control system determines that a distributor is to be shipped a shipment taking up 500 units of space. If a delivery vehicle has a capacity of less than 500 units, multiple vehicles are needed, and at least one will have some amount of un-utilized capacity. Similarly, if a delivery vehicle has a capacity of more than 500 units, the remaining capacity will also be un-utilized. This un-utilized space represents further inefficiencies, where a manufacturers and distributers are essentially paying to ship empty space.
Efforts have also been made to alleviate these further inefficiencies. In one example, if the capacity needed for a second shipment is less than the empty space in a vehicle, then the shipments can be grouped. However, this may not completely utilize all available empty space. For example, one shipment requires 300 units of space, and another requires 130. Together the shipments require 430 units. However, a delivery vehicle may have more or less than 430 units of capacity, and the un-utilized space, while diminished, is not eliminated. Additionally, if the shipments have different destinations, grouping the shipments together introduces further logistical problems involving packing the shipments so that they can be removed in the correct order efficiently, and the logistical difficulty of having a delivery vehicle making multiple stops.
A further inefficiency in many supply chains involves the packaging of products that are delivered to a distributor before being ultimately delivered to a customer. For example, when multiple orders are grouped together, the orders must be unpacked, separated, and repacked before being shipped to a final destination. The amount of unpacking and repacking necessary for distributing products to customers can significantly increase distribution costs, time, and labor. Efforts to alleviate these additional inefficiencies include organizing products within a group of orders in a way that facilitates unpacking. However, since the quantity of products in a shipment are determined in advance by an order or by an inventory control system, the amount of optimization that can be performed for the packaging of such preset shipments is limited.
What is needed, therefore, is a system and method for managing and optimizing a supply chain that is not limited by inventory control or by shipment packaging inefficiencies.